Shares of Comcast Corp surged 17% on Monday, 29 June, to a seven-week high of $27.10 on the Nasdaq after the company announced plans to separate its media and connectivity businesses by spinning off NBCUniversal and Sky into a separately listed public company.
The proposed spin-off will leave Comcast as a standalone telecommunications company focused on broadband and wireless services. The announcement comes at a time when Comcast’s shares have struggled to regain momentum.
The separation is expected to allow both businesses to pursue distinct strategic priorities as the telecommunications and entertainment industries continue to diverge. The new media company will include NBCUniversal’s theme parks business, Universal film and television studios, the NBC and Telemundo networks, Peacock, Bravo, and the European media business, Sky.
Comcast said it intends to complete the transaction as a tax-free spin-off, creating a pure-play media company. Existing Comcast shareholders will own shares in both Comcast and the newly listed NBCUniversal, with the separation expected to be completed within the next year.
The two companies will adopt a dual class share structure, while Comcast expects to retain an for up to one year following the spin-off. The company did not disclose the expected market capitalisation of the two entities.
According to Comcast, the separation is designed to create two focused public companies as technological innovation, evolving consumer behaviour, and changing competitive dynamics continue to reshape the media and communications industries.
The company has been working to stem subscriber losses in its broadband and cable television businesses while expanding its Xfinity Mobile wireless operations.
Mike Cavanagh will serve as Chief Executive Officer of the new NBCUniversal, while Comcast’s former Chief Financial Officer, Michael Angelakis, will become Chief Executive Officer of Comcast.
The announcement comes as the US media industry undergoes a major structural shift, with audiences increasingly moving away from traditional television toward streaming platforms and social media.
Earlier this year, Comcast spun off its cable television networks, including CNBC, into a standalone company named Versant Media, while earlier this month.
Shares stage biggest rally since 2008
If the gains hold through the close, Comcast shares will register their biggest single-day jump since 28 October 2008. Despite Monday’s rally, the stock has struggled to gain traction since September 2021, with most monthly closes during the period ending in negative territory.
Since then, the shares have declined 57%, falling to their lowest level since November 2013, underscoring the challenges facing the company amid shifting industry dynamics.
On an annual basis, Comcast shares have declined in each of the past two calendar years and are down another 10% year-to-date.
(With inputs from Bloomberg and agencies)
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